Energy News: China to Resume Oil Imports

Reuters has an exclusive report that China’s Unipec is planning to resume purchasing U.S. crude by March after the Xi-Trump deal at G-20. Two major pipelines in Canada are down. Oil prices continue to fall as financial markets take a hit. Bad weather has taken out Libya’s crude export terminals. Floating LNG cargoes are being scooped up by buyers in China, Japan and South Korea at fire sale prices. And Saudi Arabia continues to push Russia to join an oil-production cut.

BEIJING/SINGAPORE, Dec 5 (Reuters) – Chinese oil trader Unipec plans to resume U.S. crude shipments to China by March after the Xi-Trump deal at the G20 meeting reduced the risk of tariffs being imposed on these imports, three sources with knowledge of the matter said.

The sources told Reuters that Unipec – trading arm of state refiner Sinopec 600028.SS – is looking to import U.S. oil by March 1, which marks the end of a 90-day negotiating period agreed by the leaders of the world’s two biggest economies. (Full Story)

China’s crude oil imports from the United States ground to a halt in October as this year’s trade war between the two countries escalated. (Full Story)

“Chinese buyers who want to buy U.S. crude will rush to import the oil during this window,” a senior executive from Asia’s largest refiner Sinopec said, adding that the oil has to arrive in China before March 1.

“Oil prices are low, so it makes economic sense to store some crude as commercial inventories,” said the executive, who asked not to be named.

Sinopec said it has a policy not to comment on specific trade deals. Unipec did not respond to an email.

Oil prices have slumped by around a third since early October amid an emerging glut, triggering expectations that the Organisation of the Petroleum Exporting Countries (OPEC) will agree to supply cuts at a meeting this week. O/R

It was unclear how much oil Unipec – China’s largest crude oil importer – would order from the United States, but one of the sources said the company could lift a record volume of oil in January.

China’s previous record for a month came in January 2018, when it imported about 472,000 barrels per day (bpd) from the United States, according to Chinese customs data.

Before the trade dispute erupted in mid-2018, China had become the largest importer of U.S. crude. China imported on average 325,000 bpd of U.S. crude in the first nine months of 2018 before imports fell to zero in October, customs data shows.

Although crude oil was not included on Beijing’s import tariff list, Chinese buyers started avoiding U.S. oil from mid-2018. (Full Story)

U.S.-based trade and shipping sources said Unipec is back in the market, looking to buy U.S. crude and book ships for China.

Unipec may have chartered VLCC Manifa to load U.S. oil this month, one of the sources said. Another said the company has provisionally booked a VLCC to load U.S. oil in January and make the 45-50-day voyage to China for $8.4 million.

While China is expected to maximize U.S. oil imports during the 90-day window, the overall outlook for this trade flow in 2019 remained murky.

“Tensions have eased between the two countries but we can’t forecast what will happen after March,” the Sinopec executive said.

“There is a lot of pressure on both sides to reach a mutual agreement in 90 days.”

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